Ukraine's Group DF say arrest of owner Firtash 'a misunderstanding'

14 March 2014 11:37 Source:ICIS News

LONDON (ICIS)--Leading Ukrainian nitrogen fertilizer manufacturer Group DF on Friday confirmed the arrest of owner Dmitry Firtash in Austria, but blamed the oligarch's detention by local authorities acting on an FBI warrant as a "misunderstanding".

In a short statement published on the Kiev-based group's website this morning, the company said the 48-year-old's detention was not related to the group's business activities, but to an investment project dating back eight years.

"Group DF can confirm that Dmitry Firtash, the owner of the group, has been detained in Vienna," Group DF announced.

"According to the information we have, the actions of Austria's law enforcement authorities in relation to Dmitry Firtash are neither related to the events happening in Ukraine, nor to the group's activities in Europe or [the] USA. They are related to an investment project dating back to 2006.

"We are convinced that this incident is the result of a misunderstanding, and that this situation will be resolved in the nearest future.

"Group DF will provide further information on this subject in due course."

Group DF is the owner of the Ostchem Holding group for Ukrainian mineral fertilizer producers Cherkassy Azot, Stirol Gorlovka, Severodonetsk Azot and Rivne Azot, which together represent the bulk of Ukrainian nitrogen fertilizer production.

Ammonia, urea and ammonium nitrate (AN) from these plants are marketed by Switzerland-headquartered NF Trading.

The billionaire's arrest in the Austrian capital on 12 March has cast another shadow over Ukraine's fertilizer industry which was already facing uncertainty following recent civil unrest.

In addition to widespread geopolitical tension, Russian energy giant Gazprom announced last week that it will remove a discount on natural gas prices from 1 April in a move likely to significantly raise production costs for ammonia and urea.

Some market participants have expressed concern that if the FBI decide to freeze Firtash's assets and accounts, then that could impact operations at NF Trading.

However, others say that, in the short term at least, it is business as usual for the industry, and Black Sea ammonia and urea cargoes continue to load in Yuzhny. 

Additional reporting by Rebecca Clarke

By Richard Ewing